A former Northampton County politician is sentenced to probation for tax evasion.

READING – Wind Gap attorney Nick Sabatine wore a wire to help federal agents build a case against the manager of a Slate Belt loan company who admitted ripping off investors of millions of dollars.

Sabatine's cooperation spared him a prison sentence for tax evasion on income he got from the failed Blue Mountain Consumer Discount Co., but the former Northampton County councilman and one-time congressional candidate will nonetheless pay a penalty.

U.S. District Judge Jeffrey L. Schmehl on Tuesday sentenced Sabatine to two years of probation, including three months of house arrest, and he will have to fight to recover his reputation and legal career after the likely suspension of his law license, defense attorney Philip Lauer said.

Sabatine, who lives in Bushkill Township, must also pay a $10,000 fine. The 63-year-old pleaded guilty to the single charge of tax evasion in December.

Assistant U.S. Attorney Michael S. Lowe said the government requested a sentence that would spare Sabatine prison time because he deserves credit for bringing the larger crime behind Blue Mountain's collapse to the attention of federal authorities.

After Sabatine went to the FBI in Allentown and admitted he had failed to report investment interest and referral fees that he received from Blue Mountain, he met with its manager, Walter "Buddy" Lambert, and recorded conversations about the company.

"[The recordings] allowed us to understand what Mr. Lambert was doing and what his mindset was," Lowe said.

Lambert, 73, of Plainfield Township was personally responsible for investors' losses of nearly $2.3 million and the loss of nearly $253,000 in federal tax revenue, prosecutors say.

He pleaded guilty in September to 16 counts of mail fraud, five counts of wire fraud and a count of interfering with the Internal Revenue Service and faces a possible sentence of 51 to 63 months in prison. His sentencing is scheduled for Dec. 29.

Also charged with tax evasion are Blue Mountain's principal owner, Dr. Francis J. Cinelli Sr., 88, and his son Francis "Mooch" Cinelli Jr., 50, both of Bangor. They are scheduled to plead guilty next month, Lowe said.

For three decades, Blue Mountain was a Slate Belt fixture, offering loans to consumers to buy appliances and equipment or pay for home improvements. It also promised investors a handsome profit by loaning out their money at interest rates up to 24 percent.

Sabatine said he began investing in Blue Mountain between 1999 and 2001. It wasn't until 2010 that he suspected that something was wrong with the company that rented an office in the same building as Sabatine's law practice.

In the fall of that year, the company stopped making monthly interest payments to investors. A storm of civil litigation in Northampton County Court followed, bringing allegations that Lambert and Cinelli Sr. had drained millions of dollars in investors' money for their own use.

Sabatine and several of his relatives are among those suing Blue Mountain, Lambert, Cinelli Sr. and his family. They claim the loan agency's failure cost them more than $4 million.

Sabatine had also advised a number of clients to invest their legal settlements with Blue Mountain. In exchange for the referrals, Sabatine received 1 percent interest on his clients' investments. He often took the payments in cash, prosecutors said.

In a letter to the judge urging leniency, Northampton County lawyer John R. Vivian described how Sabatine came to him and disclosed everything he knew about Blue Mountain.

"Nick without hesitation said that he wanted to come clean and that he could no longer continue to live the way he was as this matter was affecting his sleep and his health, as he had overriding concerns about clients who are also invested at Blue Mountain," Vivian wrote.

Vivian, who is representing Sabatine and his family in the civil lawsuits, noted that sentencing him to prison would destroy his legal practice.

Northampton County District Attorney John Morganelli also provided a letter on Sabatine's behalf, crediting him for taking responsibility and asking Schmehl to consider a minimal period of probation.

"In life, all of us make mistakes. Mr. Sabatine has made a mistake that he has recognized and that will forever alter his professional image and future," Morganelli wrote.

Schmehl said Tuesday that he struggled with the decision on whether to give Sabatine a sentence that included a stint in prison.

"There's really no evidence you were part of this scheme and that's where this kind of breaks for me," Schmehl said. "People clearly got hurt, but you and your family also got hurt."

Lowe said that given the relatively small amount of unpaid tax and the fact that Sabatine was himself a victim, the U.S. Attorney's Office was uncertain whether Sabatine should be charged.

"The fact that you're an attorney, the fact that you referred your own clients means you don't get a pass," Lowe said.